Shenzhen’s rising unemployment a growing national concern

After being laid off by a consulting company at the end of 2023, 35-year-old finance manager Zheng Min (pseudonym) has since been unemployed.

Zheng, who is from Zhangzhou, Fujian, told Lianhe Zaobao that in the past half year, she has applied for more than 100 jobs in Xiamen. Either she was unsuccessful or the terms offered by the company did not meet her expectations.

“I have been in finance for over a decade, and my salary was on average 25,000 RMB (US$3,500) per month. But for similar managerial roles, many companies are now only willing to offer 8,000 to 12,000 RMB, with longer work hours and less benefits,” she shared. 

Feeling helpless from her unsuccessful job hunt, Zheng returned to Shenzhen in May in the hopes of finding a suitable job in the first-tier city.  

She said, “I left Shenzhen three years ago to work in Xiamen and be closer to my hometown. But the current salary standards can no longer support my living expenses, so I have no choice but to find a job back in Shenzhen.”

Zheng lamented that even though there were more opportunities in big cities, the employment market in Shenzhen has significantly changed compared with when she was there in 2018 — the number of job opportunities has shrunk while competition has intensified.

“It’s an employer’s market now. When companies choose employees, they are less tolerant of those with career gaps. Women also face more workplace discrimination in their job hunt, especially in terms of their marital status and plans to have children, among other personal issues.”  

Zheng is just one among the growing army of unemployed people in Shenzhen. According to data from the Shenzhen Human Resources and Social Security Bureau, the number of newly registered unemployed rose by 40.1% year-on-year in Q1 2024, 15% more than the previous quarter. 

What is worrying is that this figure excludes those unemployed but did not register as such, those who had already registered previously, as well as those unemployed who continue to pay for their social security. The official statistics are believed to only represent a small slice of the actual situation. 

Shenzhen has stopped publicly announcing the local unemployment rate since 2022. Hence, the latest data released has stirred fervent debate among Chinese netizens.

Some expressed worry over the high unemployment rate, while the unemployed have commended the local government for honestly depicting the dire straits of the employment situation. Indeed, the figures have proven to be even more alarming than the national unemployment statistics reported by officials.

The unemployment figures have since been removed from the Shenzhen authorities’ official website.

According to China’s National Bureau of Statistics, the surveyed urban unemployment rate reached an average of 5.2% in Q1 2024, down 0.3 percentage points from the same period last year. Even youth unemployment, which tends to be higher, was only 14.7% in April 2024, down from 15.3% in March.

On social media, many unemployed netizens in Shenzhen stated that they choose to “pretend to work” at public places such as libraries and cafes, to maintain their regular daily schedule and not worry their families.

During a visit to the Shenzhen Library at Longhua District, Hongshan, I found the place packed to the brim even on a weekday, mostly with youths. I could not be sure of their employment status, but I saw many equipped with their laptops, with some sending resumes, watching videos or napping away.

Peng Peng, executive director of Guangdong System Reform Research Society, told Lianhe Zaobao that the many industries in Shenzhen — especially the finance and tech industries — not only serve the Chinese market but are also closely linked with the global market. Amid the unstable domestic and global economic environment, these companies were more likely to lay off employees or reduce hiring. 

Chloe Wang, an associate director at recruitment company Robert Walters China, pointed out in an interview that layoffs in Shenzhen in Q1 2024 were mostly in the tech sector, extending the wave of layoffs that began in the sector last year.

Wang assessed that tech enterprises expanded too quickly in the past few years when the economy was thriving. However, their operations and development now face challenges due to economic downturns, deteriorating international trade conditions, new policy regulations and constraints, as well as challenging technological upgrades and research and development efforts.

Although the overall tech industry is under pressure to retrench employees, the situation varies across different sub-sectors. 

For example, Wang said that enterprises focused on emerging technologies such as artificial intelligence (AI), big data and cloud computing continue to maintain momentum, while traditional hardware manufacturers or software developers face greater challenges.  

In addition, unlike traditional companies, investors play an important role as a source of funding for Chinese tech enterprises.  

Wang pointed out that during an economic downturn, investors become more conservative and prefer investing in active AI projects and other promising tech sectors such as biotechnology and new energy. They tend to be more cautious about other conventional tech projects.

She said, “As tech enterprises optimise their allocation of human resources, they are indeed eliminating some jobs while at the same time actively recruiting talents who possess new skills and expertise to adapt to the demands of digital transformation and globalisation.”

She added that many tech companies are also seeking to expand into overseas markets amid a lacklustre Chinese market. As markets outside of China vary in terms of law, culture and market competition, enterprises require greater expertise in these areas to handle the challenges.

“Such adjustments reflect tech enterprises’ quick response to economic changes and their ability to find new growth areas and opportunities amid challenges,” she noted.

As a city at the forefront of China’s reform and opening up, Shenzhen is actively reducing its dependence on traditional manufacturing industries and transitioning towards developing the service sector, particularly high-tech and innovative services.

Peng thinks that the current unemployment spike in Shenzhen reflects the labour market’s difficulties in adjusting to shifts in the industrial structure.

He said that although Shenzhen was the fastest-growing city in Guangdong province in the first half of the year, retail sales of consumer goods indicated lacklustre growth in the service sector. As a significant industry for job absorption, its downturn directly affects job creation.  

Data from the Shenzhen Bureau Of Statistics showed that Shenzhen’s total retail sales of consumer goods from January to May this year reached 417 billion RMB, a mere increase of 1.8% year-on-year.

Additionally, the manufacturing sector’s ability to drive employment has weakened as a result of AI, digitisation and intelligentisation. Meanwhile, new growth industries have yet to fully absorb this unemployed group.

Shenzhen’s grim employment situation highlights the serious challenges China faces in promoting high-quality development. Some analysts were expecting the officials to mull over employment support policies and present them at the third plenary session of the 20th Communist Party of China Central Committee on 18 July.

Peng said, “After all, this involves the direction of the country’s development and the global market integration model. Businesses still need to prepare for operational challenges, and residents still need to be prepared for tough times.” 

While the 5,000-word communique published by the state media on 18 July outlined forthcoming reforms, it lacked substantive details, leaving much uncertainty about when improvements might materialise. Some analysts are concerned that delaying action could exacerbate China’s economic challenges beyond repair.

This article was first published in Lianhe Zaobao as “深圳失业者图书馆佯装上班”.

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